There has never been a better time to outsource non-core activities in your business. The hike in Employers’ National Insurance from April 2025, along with the introduction of the Employment Rights Bill in 2026, is making it less attractive for companies to build their own in-house teams.
The change in the ERNI (Employers’ National Insurance) rate and the reduction of the threshold at which it applies will increase the cost for an average salary of £35,000 by approximately £900 per annum. The Employment Rights Bill (ERB) will introduce day-one rights to statutory pay and redundancy, which increases the risk for many employers.
It’s not only the tangible costs that can be saved—there are many more benefits to outsourcing that will enhance your business and give you more time to focus on building the best contract and temporary recruitment agency. Let’s explore them here:
Cost Savings – Access to Fully Trained Part-Time Resources
Outsourcing your pay and bill functions will provide cost savings. A good outsourcer focuses on their core competencies, benefits from economies of scale, and has access to technology and fully trained specialist staff.
As a client of an outsourcer, you are essentially buying into a part-time resource, as the service will be shared across multiple clients, passing those benefits on to you. When the hike in Employers’ National Insurance comes into effect in April, you shouldn’t see an increase in costs. If you have an in-house team, now may be the best time to review your options.
Access to Technology – Gain Advantages Through Tech
Any reputable outsourcer will have at least a fully capable online timesheet system, allowing for online submission and authorisation. This speeds up the entire pay and bill process, reduces costs, and minimises potential errors.
If your outsourcer can integrate with your CRM or front-office systems, data can be transferred seamlessly, further reducing overhead costs and eliminating duplication of effort and errors.
Access to Expertise – Specialist Knowledge on Tap
Your outsourcer should be well-versed in employment legislation and its application within recruitment. They should understand the nuances of payroll processing, including PAYE, National Insurance, auto-enrolment, AWR, holiday pay, and minimum wage compliance.
Management Time – Eliminate a Headache and Free Up Time
By outsourcing non-core activities, the management time spent on these tasks will disappear. You won’t have to find cover for holidays or sickness, allowing you to focus on growing your business.
Improved Productivity – Eliminate Time Spent on Non-Core Activities
Businesses that outsource experience improved productivity because in-house teams are less distracted by non-core activities. A good outsourcer will handle all the essential but non-core tasks, leaving your team to focus on what they do best—driving sales and productivity.
Reduction of Errors – Getting Things Right the First Time
Reducing errors in payments to your temporary workers or in billing to your clients provides two key advantages:
- You appear professional and capable. Workers and clients will trust you and are more likely to remain loyal to your services.
- Correct billing ensures clients pay you more quickly, reducing your financing costs.
Scalability and Flexibility – Adjust to Business Needs Effortlessly
Outsourcing enables flexibility in scaling activities up or down depending on your business needs, without worrying about hiring, managing, or training extra staff. You should be able to turn the service on or off, or scale up with ease.
This agility is particularly useful in industries where demand can fluctuate, such as education or hospitality.
Risk Management – Enhance Corporate Governance with Risk Mitigation
By outsourcing to a professional pay and bill provider, you reduce compliance risks, as they will have the people, systems, and training necessary to cope with a complex regulatory environment.
Operational risks are also mitigated, as payroll functions can continue to operate independently in the event of a cyber attack or if your systems are compromised for any reason.
Additionally, outsourcing can help businesses weather economic downturns by enabling quick scaling down or cost-cutting measures without affecting core operations.
Enhanced Service – Maintaining High Standards
The best outsourcers are focused on customer service and maintaining high-quality standards to attract and retain clients. By choosing a service provider with established service levels and tested procedural controls, you can enhance the service your business provides.
